agriculture, in industry, and in the production and conservation of energy. (b) As used in this section, the term "light capital technologies" means those means of production which economize on capital wherever capital is scarce and expensive and labor abundant and cheap, the purposes being to insure that the increasingly scarce capital in the world can be stretched to help all, rather than a small minority, of the worlds poor; that workers will not be displaced by sophisticated labor-saving devices where there is already much unemployment; and further, that poor nations can be encouraged eventually to produce their own capital from surplus labor time, thus enhancing their chances of developing independently of outside help. $ 4 Transnational Corporations, Foreign Investment, and Tax Law Antitrust Laws Transnational Corporations On January 26, 1977, the Department of Justice issued an “Antitrust Guide for International Operations," which sets forth its views on enforcement with respect to common international antitrust questions. The Guide contains a general discussion of the Department's policy and also a more detailed discussion of fourteen representative case situations and how antitrust principles of enforcement would be applied to them. Assistant Attorney General Donald I. Baker, in charge of the Antitrust Division, said the Guide is intended to be a statement of the Department of Justice's current enforcement policy. The Guide is designed to help businesses comply with U.S. antitrust law as it applies to their international activities. In his remarks, entitled "Antitrust in the Sunshine," before the Antitrust Law Section of the New York State Bar Association on January 26, 1977, Mr. Baker described the first segment of the Guide, which explains U.S. antitrust enforcement policy, in these terms: [T]here are two cornerstones to the Antitrust Division's enforcement policy in the area of international commerce: (1) the protection of the American consuming public by assuring it the benefit of competitive products and ideas produced by foreign competitors as well as domestic competitors, and (2) the protection of American export and investment opportunities against privately imposed restrictions. In protecting these interests, our enforcement policy is primarily concerned with price fixing, market allocation and cartel activities affecting the U.S. market, and is not concerned with foreign transactions that do not have a substantial and intended effect on U.S. commerce * The fourteen representative case situations deal with problems under the following headings: Case A: A Multinational Operation Case B: A U.S. Firm's Foreign Acquisition Case C: Joint Bidding Case D: Joint Research Case E: Manufacturing Joint Venture and Know-How License Case F: Know-How License Case G: Tying of Licensed Technology Case H: Licensing a Non-Market (State-Owned) Enterprise Case J: Exclusive Distributorship Case K: Price Stabilization Case L: Dealing With A Cartel Case M: Political Risk Insurance Case N: Government-Imposed Restraint The introduction to the Guide makes clear that it is not a substitute for the Department of Justice Business Review Procedure (28 CFR 506), under which the Department may issue a statement of enforcement intention with respect to a specific pending transaction. Neither does the Guide describe the Federal Trade Commission's enforcement policies nor the Federal Trade Commission Act nor the Clayton Act, as administered by the FTC. When concluding his address, Mr. Baker noted the evolving nature of these guidelines: This Antitrust Guide for International Operations reflects current enforcement policy. As we learn more, we may need to modify and add to the examples. As the economy changes there may be times when the positions stated in the Guide will not always keep up with what the Division considers appropriate enforcement. For a discussion of the applications of antitrust laws to jurisdictional questions, see ante, Ch. 6, § 4, pp. 465–466. On August 8, 1977, Attorney General Griffin B. Bell gave an address before a meeting of the American Bar Association in Chicago, Illinois, which focused on the principle of comity in the application of antitrust laws to foreign commerce. Attorney General Bell also discussed the importance of comity in international judicial assistance, in antiboycott and bribery legislation, and in cases of "hot pursuit" across the Canadian border. Portions of Judge Bell's remarks concerning antitrust laws follow: It is axiomatic in law that the best way to understand a rule or doctrine is to observe it under strain. That is as true for the principle of comity as it is for any other, and nowhere is the strain greater than in the application of antitrust laws. The Supreme Court has noted that Congress, in passing the Sherman Act, was operating to the full extent of the Commerce Clause. That law applies to interstate and foreign commerce and to trade in both exports and imports in the United States. Hence, the scope of the Sherman Act does not stop at the water's edge, and foreign businessmen and their sovereign governments-view this as an extraterritorial application of U.S. laws. We are scrupulous in not reaching beyond our authority, but our law enforcement obligation does not allow us to look the other way when an antitrust investigation involves foreign nationals. The resulting interactions with foreign nations often involve no small amount of explaining on our part and a large measure of tact and forebearance as well. Sometimes comity causes us to stay our hand. For instance, about two years ago the Justice Department's Antitrust Division investigated a merger in a foreign country by nationals of that country who happened to be among the world's largest producers of an important industrial product. The firms involved exported most of their production to the United States, and significant assets of the combined firms were located here. Further, while there was no evidence of an explicit conspiracy, the marketing of the product generally followed a pattern of oligopoly pricing. In short, there was not much question that United States courts had subject-matter jurisdiction over the merger. Nonetheless, the Antitrust Division concluded that since the merger involved stock acquisitions of foreign companies on a public exchange in the foreign country, and since the merger primarily involved control of assets located in the foreign country, and since the government concerned communicated to us that any attempt by the United States to block the merger would be deemed a serious infringement of a vital national interest, the Justice Department declined to assert U.S. jurisdiction on grounds of comity and foreign policy. On two recent occasions—as a matter of comity-the Department of Justice has sent documents to foreign antitrust agencies regarding possible liability by American and foreign corporations under foreign antitrust law. Those documents were not received by us under subpoena and did not otherwise require confidentiality. We will, in the interest of comity, continue this cooperation with foreign antitrust agencies-even when it exposes United States firms to liability for violating foreign laws. There is no compelling United States interest in protecting United States nationals who violate foreign laws. Comity may be expressed many ways. It may include notification to other governments of contemplated legal actions that significantly affect them. It may include giving other governments the opportunity to consult regarding interests relevant to the contemplated action. It may involve investigation techniques-that is to say, in what way, and under what circumstances, to seek what kinds of information from foreign governments. But while we try to exercise comity in enforcing antitrust laws, some nations find our position unacceptable. Several nations have passed laws to prevent persons within their territory from cooperating with the United States, and they have established criminal sanctions for those who comply with United States law in violation of these "blocking" statutes. Among those which have adopted and, from time to time, implemented such laws are the United Kingdom, the Federal Republic of Germany, Canada, Australia, and the Netherlands. Comity should work both ways. We owe deference to other nations when their vital national interests are at stake and the conflicting United States interest carries a lesser weight. But other nations owe us, in turn, deference at least to the extent of working toward a compromise arrangement if our fundamental national interests are directly affected. Of course, there will be unavoidable situations where two sets of interests conflict, each country viewing its own as supreme. Such situations provide a test of each nation's sense of comity, and perhaps its diplomatic skills as well. But I see no such excuse for deliberately enacting "blocking" legislation solely to frustrate U.S. antitrust laws, without regard to the seriousness of the case or the national interest at stake. Blanket prohibitions by foreign governments against cooperation with U.S. investigations, by their nationals or even by U.S. citizens located in their territory, are not only inconsistent with comity but may also harm those who invoke prohibitions. Cooperating with investigations is the best way of bringing exculpatory information to our attention. Cooperation by a foreign firm or government is a significant factor influencing our prosecutorial judgment. Let me make clear to you that I deem our criminal investigation of the international uranium industry and our civil investigation of the international oil industry matters of fundamental United States interest. We are obligated to do all that we reasonably can to prosecute foreign private cartels which have the purpose and effect of causing significant economic harm in the United States in violation of antitrust laws. To my mind there is a fundamental United States interest in not having our citizens pay substantially higher prices for imports because private firms get together and rig international markets. There is also a fundamental United States interest at stake when private businesses, although foreign, get together to injure and perhaps destroy an American competitor. Of course, I do not hold the utopian view that all international markets must be perfectly competitive. I recognize that international markets structured by explicit agreements between_duly authorized government officials may be legal under United States law. In some instances such agreements may be desirable or even necessary in terms of United States economic policy. But there is a big difference between arrangements by governments to structure markets within their jurisdictions and private cartels getting together to fix prices and allocate markets worldwide, even where those cartels have tacit support from governments. In summary, comity cannot be a principle which the United States is bound to respect when others have valid interests and yet does not apply to others when we have at least equally valid interests. Dept. of Justice Press Release (Aug. 8, 1977). For portions of Attorney General Bell's remarks concerning international judicial assistance and "hot pursuit," see ante, Ch. 6, § 4, p. 501. Corrupt Practices On December 20, 1977, President Carter signed into law the Foreign Corrupt Practices Act of 1977. Portions of President Carter's statement concerning this legislation follow: This law makes corrupt payments to foreign officials illegal under United States law. It requires publicly held corporations to keep accurate books and records and establish accounting controls to prevent the use of "off-the-books" devices, which have been used to disguise corporate bribes in the past. The law also requires more extensive disclosure of ownership of stocks registered with the Securities and Exchange Commission. These efforts, however, can only be fully successful in combating bribery and extortion if other countries and business itself take comparable action. Therefore, I hope progress will continue in the United Nations toward the negotiation of a treaty on illicit payments. I am also encouraged by the International Chamber of Commerce's new Code of Ethical Business Practices. 13 Weekly Comp. of Pres. Doc. 1909 (Dec. 26, 1977). The Foreign Corrupt Practices Act amended the Securities Exchange Act of 1934 by inserting after sec. 30 the following new section: "SEC. 30A. (a) It shall be unlawful for any issuer which has a class of securities registered pursuant to section 12 of this title or which is required to file reports under section 15(d) of this title, or for any officer, director, employee, or agent of such issuer or any stockholder thereof acting on behalf of such issuer, to make use of the mails or any means or instrumentality of interstate commerce corruptly in furtherance of an offer, payment, promise to pay, or authorization of the payment of any money, or offer, gift, promise to give, or authorization of the giving of anything of value to "(1) any foreign official for purposes of "(A) influencing any act or decision of such foreign official in his official capacity, including a decision to fail to perform his official functions; or "(B) inducing such foreign official to use his influence with a foreign government or instrumentality thereof to affect or influence any act or decision of such government or instrumentality, in order to assist such issuer in obtaining or retaining business for or with, or directing business to, any person; "(2) any foreign political party or official thereof or any candidate for foreign political office for purposes of— "(A) influencing any act or decision of such party, official, or candidate in its or his official capacity, including a decision to fail to perform its or his official functions; or “(B) inducing such party, official, or candidate to use its or his influence with a foreign government or instrumentality thereof to affect or influence any act or decision of such government or instrumentality, in order to assist such issuer in obtaining or retaining business for or with, or directing business to, any person; or |